Everything David Newell said on any show that made the record, most notable first. Each card names its show and opens the statement there.
$1M ARR triggers revenue multiples instead of SDE for SaaS acquisitions
“So as a rough guide, I would say that the revenue multiple starts to kick in as an approach or a valuation approach at, like you said, a million dollars in ARR. And that's not like an absolute hard and fast number, but the reason it's chosen there is typically…”
Private equity firms cap SaaS revenue multiples at roughly 8x
“It's anywhere between two at the bottom, where it's something that's really, really flat, stretching up to eight, eight times I've seen, kind of, private exe guys comfortably go to, they sort of tend to tap out a bit after that, and then north of that is very …”
Preparing a SaaS business for sale improves its day-to-day operations
“Almost everything that you do to improve the business for sale actually makes the business better operationally.”
SaaS founders need at least $100K SDE to use established brokers
“For us, it's about a 100,000. We tend not to list anything below the kind of quarter of a million mark, 300,000 mark. I mean, there are other more independent brokers or sort of smaller advisory places that might do it. But yeah, once you hit that kind of 100,…”
Median SaaS SDE multiple is 3.9x, typically ranging from 3x to 5x
“I would say that now the typical range is between three and five. The median, I would say, is probably at kind of 3.9 or so.”
Rule of 40 SaaS businesses command 3.5x to 4x revenue multiples
“If the business's revenue growth plus its EBITDA margin for that year is at or If you're above 40%, so let's say it's growing up 35% year over year, and it's got five percent in EBITDA margin, then it's just at that threshold. Then it starts to command, yeah, …”
Operating multiple SaaS projects under one entity complicates acquisition expense attribution
“Where I see the biggest challenge come up with SaaS businesses is that in my experience working with a lot of SaaS business owners is that they often have multiple projects on the go at any one point in time, and they hold them all under one particular holding…”
Commingled expenses and opaque metrics can make a SaaS company unsellable
“A lot of the times sellers can be like, oh, I don't mind taking like, you know, a whole multiple, one whole multiple off my price if I deal with that. Sometimes actually becomes like really almost impossible to sell because you reduce the trust Down because th…”
Over a dozen SaaS founders reconsidered selling after cleaning up their operations
“Been said to me at least a dozen times when we've gone through the prep process for going to market that, you know, owners have said, oh, I actually decided that I really, really love my business. I'm not sure whether I want to sell it now, having gone through…”
Startups For the Rest of Us 5